inequality

World screams out for action but climate summit responds with a whisper

December 16, 2019

Responding to the final communiqué of the COP25 climate talks in Madrid, Chema Vera, Interim Executive Director of Oxfam International, said:

“The world is screaming out for climate action but this summit had responded with a whisper. The poorest nations are in a sprint for survival yet many governments have barely moved from the starting blocks. Instead of committing to more ambitious cuts in emissions, countries have argued over technicalities.

“Poorer nations spoke with one voice to demand funds to help them recover from the loss and damage inflicted by the climate emergency. For the homes that have become uninhabitable, the land that has become un-farmable, and the lives that have become unbearable. Wealthy nations have used every trick in the book to stall progress and avoid paying their fair share.

“Now more than ever, it is vital that people across the world keep up the pressure on governments to deliver more ambitious climate action.”

Emissions Cuts

Instead of committing to more ambitious cuts in emissions, countries have argued over technicalities. Commitments made so far have come from countries that account for around only 10 percent of global emissions. They will not keep global temperatures from rising above 1.5°C. If we are to have any chance of avoiding catastrophic climate impacts it is critical that all countries – led by the largest emitters – commit to much deeper emissions cuts in early 2020.

Loss and Damage

COP25 did not establish a new funding mechanism for Loss and Damage. Instead countries agreed to start a conversation about funding and create a new expert group to advise on the issue. They also asked the Green Climate Fund – the main multilateral fund through which rich countries channel climate finance – to take up the matter.

Without new and additional funding, the world’s most vulnerable people will struggle to recover and rebuild after climate shocks. For example, Oxfam’s report, Forced from Home, shows that climate-related disasters are now the biggest driver of internal migration, forcing one person from their home every two seconds. It underlines the need for new and additional money to help communities that cannot adapt to the climate crisis.

Gender Justice

The Gender Action Plan approved at the summit sets out a plan for increasing the participation and leadership of women in international climate talks, and in the design and implementation of climate policies at the national and local level. While the plan still needs to be translated into concrete measures, actions and targets, it is encouraging to see this blueprint for change given that poor women are often the hardest hit by the climate crisis.

Climate Finance

Wealthy countries are not providing the funds that are needed to help poor nations adapt to the climate crisis. Rich polluting countries pledged almost $90 million in new funding for adaptation in Madrid and made additional pledges to the Green Climate Fund. However, Oxfam’s analysis shows that the target of reaching $100 billion per year in climate finance by 2020 remains a distant dream after adjusting for loans and creative accounting.

Reasons to be positive

As the big polluters dissemble and spin, the global movement for climate action is growing bigger and stronger. Young people are standing up for a safer future – showing the leadership that has been severely lacking from governments. Frontline communities from Fiji to Malawi and Peru are fighting back.

The Spanish Government deserves credit for stepping in to ensure COP25 went ahead. The UNFCCC remains the only forum we have for governments, businesses and civil society to try to solve the most pressing issue of our times.

Our hopes rest with the millions of people across the world who are taking to the streets to demand climate justice. Governments must listen and come back to the table in 2020 with the commitment and ambition needed to deliver on the Paris Climate Agreement.

Oxfam G7 Verdict: Big Issues, Little Commitments

August 28, 2019

Oxfam held a climate change protest on the eve of the G7 summit in Biarritz, as world leaders put pressure on Brazil to do more to save the Amazon rainforest from wildfires.

French president Emmanuel Macron put inequality at the top of the agenda, but G7 leaders failed to make meaningful commitments to solve the crisis they have helped create, said Oxfam at the end of the Summit.

“Held in the beach town of Biarritz, France, the G7 Summit brought very few results, which will wash away with the next tide,” said Oxfam’s spokesperson, Robin Guittard. “After failing to get all seven leaders to commit to a comprehensive effort to address inequality, President Macron opted instead for a scattershot approach of piecemeal commitments that unfortunately do not add up to much.”

G7 leaders paid lip service to the dangers of inequality, but they have encouraged and enabled this unequal system to thrive by enabling the super-rich to control politics, by underfunding public services and foreign aid, by under-taxing corporations and wealth, and by fueling climate change and sexism. Perhaps it should be no surprise that at the end of the Summit, they made no commitments to reform the global tax system, invest in universal public services like education, healthcare, and social protection, or in foreign aid. The promised feminist agenda, with the ambition to follow on last year’s Canada presidency, delivered only on limited initiatives.

New business coalitions and corporate pledges pop up on a daily basis, as they did in Biarritz, but Oxfam warns that they are not the solution to the fight against inequality and climate change.

“Everyone must do their part to address inequality and climate change, but voluntary commitments by the private sector cannot replace necessary and urgent public policy and regulations,” said Guittard. “If corporations truly want to do their part, they can start by paying their fair share of taxes in the countries they do business, ensuring gender equality in their corporations, addressing CEO-worker pay ratios, and re-directing their political influence to address inequality and climate, not making it all worse.”

Even with the daily reminders that the climate crisis is upon us, the G7 did not commit to dramatically cut emissions. While France and the UK joined Germany to pledge to the Green Climate Fund, other G7 leaders missed their chance to step up to help poor countries who bear the burden and cost of climate change.

“Time is running out and the world cannot afford to squander moments like this. As the emergencies grow and the alarms ring, the public is increasingly active, showing up in millions on the streets, and in voting booth,” said Guittard. “Public pressure is growing, with young people leading the way. If leaders won’t act, they should step aside and let a new generation take charge.”

Oxfam New Zealand’s director of advocacy and campaigns, Dr Joanna Spratt, said government action on climate breakdown is critical, and New Zealand is falling behind on its responsibilities.

“Even the bare minimum contributions announced by the UK and France at the G7 summit outshine New Zealand’s commitments to the Green Climate Fund so far. New Zealand can no longer shirk its duty to replenish this critical source of funds to battle climate breakdown, and the government now must follow suit through a substantial increase in its contribution.”

At the Pacific Island Forum earlier this month, the group of Pacific Small Island Developing States issued a statement – the Tuvalu Declaration – calling on all states to take the “prompt, ambitious, and successful replenishment of the Green Climate Fund.”

“The government must listen to the voices of small island states in their calls to resource energy transition and adaptation to the climate crisis through the Green Climate Fund, instead of re-announcing money from our existing aid budget,” said Dr Spratt.

“Globally, we need to match our lofty words with actions and significantly increase our climate finance, within a rising aid budget. A good step for the New Zealand government will be a $30m replenishment of the Green Climate Fund, with a plan for increasing our contribution further.”

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5 Steps Governments Can Take To Prevent Another Mauritius Leaks Scandal

July 29, 2019

A 5-point plan to stop big corporations cheating poor countries out of billions of dollars in tax revenue, was published by Oxfam today in the wake of the Mauritius Leaks.

When multinational corporations and the super-rich use tax havens to dodge paying their fair share, it is ordinary people, and especially the poorest, who pay the price. The Mauritius Leaks show that tax havens continue not only to exist but to prosper, despite government promises to rein in tax dodging. Oxfam’s plan lists five steps governments can take to tackle tax avoidance and end the era of tax havens.

Susana Ruiz, Oxfam International’s tax advisor, said:

“Politicians could put a stop to tax scandals if they wanted to. Oxfam has listed 5 concrete solutions that would prevent another Mauritius Leaks scandal and ensure multinational corporations pay their fair share of tax wherever they do business. Developing countries can revise or void their tax treaties and introduce withholding taxes to better protect their tax revenue, and all governments – rich and poor – agree to set a global minimum effective tax rate on corporate profits.

“There is no time to waste. Developing countries lose an estimated $100 billion a year in tax revenue as a result of tax dodging by multinational corporations, and even more as a result of damaging tax competition between countries. This money is desperately needed to end hunger, tackle the climate crisis, and ensure all children have the chance of an education.”

Oxfam’s 5-point plan to build a fairer global tax system calls on governments to:

(1) Agree new global tax rules in the negotiations led by the OECD under the mandate of the G20 to ensure fair taxation of big corporations. This should include the introduction of a global minimum effective tax rate set at an ambitious level and applied at a country-by-country basis without exception. This would put a stop to the damaging tax competition between countries and remove the incentive for profit shifting – effectively putting tax havens out of business.

(2) Developing countries should not give away their taxing rights. Many treaties result in multinational companies not paying certain types of tax at all in any country. Rich countries have a responsibility in ensuring fair taxation with their investments and the projects they finance. Governments of developing countries can protect their tax base from erosion by revising or voiding their tax treaties, introducing withholding taxes and implementing strong tax anti-abuse rules.

(3) End corporate tax secrecy by ensuring all multinational companies publish financial reports for every country where they operate. The current OECD initiative on country-by-country reporting falls well short of the mark as it does not cover all multinational corporations and it does not require companies to make their financial reports publicly available. This means poor countries are unable to access the information to identify tax cheats. Stronger European proposals on public country-by-country reporting were due to be agreed this year but are being blocked by EU member states such as Germany, Ireland, and Luxembourg.

(4) Agree a global blacklist of tax havens based on comprehensive objective criteria and take strong countermeasures including sanctions to limit their use. Governments have yet to agree an objective global list of tax havens. A farcical OECD-G20 blacklist published in July 2017 features only Trinidad and Tobago. The more comprehensive European Union list omits European tax havens such as the Netherlands and Ireland.

(5) Strengthen global tax governance by creating a global tax body where all countries can work together on an equal footing to ensure the tax system works for everyone. The new round of global tax negotiations (BEPS 2.0) is a historic opportunity to put a stop to damaging tax competition and corporate tax avoidance, and to build a fairer tax system that works for the benefit of all people and not just a fortunate few. Even if the new round of global tax negotiations (BEPS 2.0) delivers positive results, a more inclusive tax body is required to oversee the global governance of international tax matters and strengthen international tax cooperation.

Notes to editors:

Download Oxfam’s 5-point plan here.

Mauritius Leaks is a global investigation by the International Consortium of Investigative Journalists (ICIJ). For more details see: https://www.icij.org/investigations/mauritius-leaks/

Oxfam’s 5-Point Plan to Build a Fairer Global Tax System

July 29, 2019

Endless corporate tax scandals?

When multinational corporations and the super-rich use tax havens to avoid paying their fair share, it is ordinary people, and especially the poorest, who pay the price. The Mauritius Leaks show that tax havens continue not only to exist but to prosper, despite government promises to rein in tax dodging. This briefing lists five steps governments can take to tackle tax avoidance, and end the era of tax havens and the race to the bottom on corporate taxation.

Oxfam’s 5-Point Plan to Build a Fairer Global Tax System.PDF

Mauritius Leaks Reveal Africa is Losing Crucial Tax Revenues to Tax Haven of Mauritius

July 23, 2019

Leaks reveal Africa is losing crucial tax revenues to tax haven of Mauritius.

Responding to research published by the International Consortium of Investigative Journalists today that multinational corporations are using the tax haven of Mauritius to avoid paying millions of dollars of tax across Africa, Peter Kamalingin, Oxfam’s Pan Africa Director, said:

“Mauritius Leaks provide yet another example of how multinational corporations are gaming the system to shrink their tax bills – and cheating some of the world’s poorest countries out of the vital tax revenues they need to get children into school or ensure people can see a doctor when they are ill.

“The true scandal is that this – like most tax avoidance schemes – is completely legal. Real political will is needed urgently to rewrite global tax rules and introduce a global minimum effective tax rate that is paid by all multinational corporations no matter where they are based. This would put a stop to the damaging tax competition between countries and remove the incentive for profit shifting – effectively putting tax havens like Mauritius out of business.

‘’African governments should revise their tax policies with Mauritius and other tax havens and defend their tax revenues better. Countries do not need to wait for global action, unilateral action is possible.’’

Oxfam New Zealand’s Executive Director Rachael Le Mesurier said: “These revelations show the importance of political will for cracking down on tax avoidance. We need the New Zealand government to support the calls for a global minimum effective tax rate at the OECD negotiations.

“New Zealanders care about corporations and the super-rich paying their fair share like everyone else; Oxfam NZ’s ‘Fair Tax Now’ campaign saw over 430 people write a submission to Ministers Nash and Robertson on priorities to take to the OECD, and many more have signed our petition calling for tax transparency legislation for multinationals.

“Without action from our political leaders, these companies and individuals can continue to game the system and cheat some of the world’s poorest countries of vital tax revenue to fund public services and help people lift themselves out of poverty.”

Notes

Mauritius Leaks revealed that multinational corporations artificially but legally shifted their profits out of African countries where they do business to the corporate tax haven of Mauritius, where foreign income like interest payments are taxed at the very low rate of 3 percent. Unfair tax agreements signed between Mauritius and countries in Africa and Europe allow some companies to cut their tax bills even further.

Mauritius Leaks is a global investigation by the International Consortium of Investigative Journalists (ICIJ). For more details see: https://www.icij.org/investigations/mauritius-leaks/

Since 2014, a huge number of documents, including the Panama Papers and Paradise Papers scandals, have been leaked by ICIJ unveiling how tax evasion and avoidance have become standard business practice across the globe.

Countries from across the globe, including several African countries, are currently participating in a round of international tax negotiations under the OECD-G20 umbrella, including issues such as the introduction of a global minimum effective tax rate. To effectively curb profit shifting, countries must ensure the global minimum effective tax rate is set at an ambitious level and applied at a country-by-country basis without exceptions.

In 2016, Oxfam exposed Mauritius as one of the world’s 15 worst corporate tax havens in its report ‘Tax Battles.’ Download a copy of the report here.

On 28 May, 2019, the Tax Justice Network launched the Corporate Tax Haven Index (CTHI). Tax Justice Network Africa cited Mauritius as “among the most corrosive corporate tax havens against African countries”.

Company loans from Mauritius and nine other tax havens to African countries total over $80 billion. This means that for every $6 of foreign investment in Africa, $1 was a company loan from a tax haven. Two infographics detailing this information are available for download here.

Oxfam New Zealand has been campaigning for the New Zealand government to do more to stop tax avoidance to support poor countries and their people. A petition calling for legislation to be introduced requiring public, country-by-country financial reporting for all large multinational corporations has been signed by over 8600 people. For the Government’s recent consultation on options for taxing the digital economy, we helped over 430 people write a submission calling for New Zealand to advocate at the OECD-G20 level for a global minimum effective tax rate and other changes to the international tax rules.

Let’s even it up with rules for all

July 4, 2019

Here at Oxfam we work hard to beat inequality.

We do this because inequality perpetuates poverty, erodes trust, fuels crime, makes us unhappy, negates economic growth, and robs opportunities from people who are struggling to get by. It even cuts short people’s lives.

How can tax fight poverty

It might surprise you to know, but one of the most important things we can do to build an inclusive world of abundance is to transform our international tax system.

The tax system is how we share resources to get the big-ticket items that we all benefit from: roads, schools, police, teachers, public libraries, nurses, clinics, rubbish collection, safe water, and electricity. These are the public services that everyone makes use of, but that people who are poor rely on. Evidence tells us that the tax system can be a powerful tool to end inequality and poverty.

Making the rules fair for all

Our international tax rules say what multinational corporations can do and what governments can tax. They are old, dating back to WWII. Multinational corporations have found ways to game the rules to drain profits away from countries where they should contribute taxes, to countries where they contribute next to nothing.

Multinational corporations have also used countries’ need for investment as leverage to drive down corporate tax rates to the lowest they have ever been. This bad behaviour robs opportunities from people across the world.

Preparing for a more digital future

Meanwhile, our economies are changing. More and more of our lives are online: we buy and sell things and information; and we create value for corporations through sharing our own information. This digital economy makes it hard for people in government to get multinational corporations – including digital corporations – to make their fair contribution where they actually operate.

In response to this, representatives from 129 governments around the world – including New Zealand – are coming together to talk about how to fundamentally change the rules to make the international tax system fit for the modern world.

If governments get this right, we could see the end of shadowy corporate tax havens and the damaging race to the bottom on corporate tax. It could mark the beginning of a new tax era with fair taxes; where countries get what they need to nurture their people and the planet.

Four things have to happen.

One. Let all countries take part in decisions about international tax rules

When decisions are being made that impact on us, it is only right that we have our say.

Yet, for decades the Organisation for Economic Cooperation and Development (OECD) – a small club of only 36 wealthy countries, including New Zealand – has led decision-making about international tax rules. This has meant that countries that benefit from the rules have made the rules, leaving out countries that are poor.

This isn’t right, especially because countries that are poor rely most heavily on taxes from multinational corporations to provide services like health and education. They should be at the decision-making table.
The OECD has recently opened up to allow other countries to take part in decisions about international tax rules. But even now, only countries that have signed on to implement the OECD’s minimum tax standards are allowed to take part in decision-making. These 120 countries belong to what is called the ‘Inclusive Framework’. This means that many countries that are poor still don’t get a say in decisions about rules that impact on them.

Two. Simple rules that work for all

At the moment, the international tax system is incredibly complex. Even for New Zealand. When our people in parliament passed a law last year to help hold multinational corporations to account, the Specialist Tax Advisor said the legislation was “the most complex and technically challenging tax Bill that I have seen in the thirty years during which I have been a full-time tax professional”. *When an experienced tax accountant says something like this, you know it is bad.

Countries that are poor don’t have the resources to invest in sophisticated tax systems. This makes it more difficult for them to catch multinational corporations when they are gaming the rules and shirking from contributing their fair share. We need international tax rules that make the system simpler, not more complex. This will help us here in New Zealand, and also our neighbours across the Pacific region and beyond.

Three. Make rules that mean tax is paid where profits are made

For far too long, multinational corporations have been able to game the international tax rules to shift profits away from where they are made. They avoid contributing their fair share to the well-being of people in the countries where they make profits. It is time to make sure that the rules ensure all multinational corporations contribute their fair share, based on the actual profits they make in each country where they operate.

Four. Set a global minimum tax rate for multinational corporations

To beat inequality, we need a global minimum tax rate for multinational corporations – so they can’t get away with shirking their fair share. One way to stop multinational corporations driving corporate tax rates down and avoiding taxes across the world is for governments to agree on an ambitious minimum tax that all multinational corporations have to pay. This tax rate shouldn’t be too low – it needs to be set at a level that makes sure multinational corporations contribute their fair share in every country they operate. For this reason, the minimum tax rate also needs to be calculated at a country level – not just in the country where the multinational corporation has its headquarters.

*Turner, Therese, March 2018, Taxation (Neutralising Base Erosion and Profit Shifting) Bill, Report of the Specialist Tax Advisor to the Finance and Expenditure Select Committee, Turner & Associates: Wellington, Accessed on 2 September 2018 at: https://www.parliament.nz/resource/en-NZ/52SCFE_ADV_75623_942/041d34fc190035632c50dc2a00018cbee08b4fc7